The debate was reopened recently in the press about whether tax avoidance and evasion cost the nation more than benefit fraud. The practical issue for ordinary people and businesses has nothing to do with the relative scales of the two problems, but the Government's response to them.
Tax avoidance is legal, and HM Revenue and Customs (HMRC) should not take issue with anyone who uses a legitimate tax avoidance technique. The 'tax cost' of some of these (such as tax lost on investment income in ISAs and tax relief on pension contributions) is actually very substantial, but these are so commonplace as not to be thought of as tax avoidance by most people.
However, the Government has committed itself to 'tacking tax evasion and benefit fraud' and increasing their tax income. This normally involves the setting up of a task force which takes a particular interest in a specific industry seen as high risk. Landlords are a favourite target, for example.
Tax evasion is against the law and may lead substantial tax geared penalties and even to a charge of 'Fraud against the Exchequer', which can lead to a prison sentence. The report of widespread tax evasion by more than 1,000 UK taxpayers following the leak of documents from HSBC in Switzerland several years ago has as yet led to only a single prosecution.
In the absence of 'star cases', HMRC have been systematically tackling those less well able to defend themselves and having steadily reduced the number of tax inspectors, now uses a set of fairly blunt weapons – such as tip-offs and software – to combat all forms of tax evasion.
The recent announcement that they will be scanning sites like eBay and Gumtree to look for 'black market' traders, will undoubtedly lead to even more innocent people disposing of surplus belongings receiving the dreaded letter form HMRC that they are the subject of an investigation.
The result is that they all too often snare innocent people and use threats of prosecution and fines to obtain settlements. The same is true of benefit fraud investigations, where the flimsiest evidence is sometimes brought to bring a prosecution or the threat of legal action used to persuade a genuine claimant from continuing to claim.
Richard Howlett - Tax & Benefit Fraud Solicitor
With a tax and benefits system as complex as the UK's (the 2014 Finance Act alone has 303 sections and 39 schedules), it is easy to get things wrong – or be thought to get them wrong by the authorities. Fraud must be deliberate, and proving that to the satisfaction of a court is a very difficult challenge for the authorities where the accused has the sort fo high quality legal representation and experience that Selachii's Richard Howlett provides.
Just because governmental authorities accuse you of something does not mean they are right. If you are in the right, resisting their demands is a viable option. Call us on 02077925649 or email This email address is being protected from spambots. You need JavaScript enabled to view it.
